The internet giant celebrates its 18th birthday this Sunday, but how did it become the company it is today?
Google turns 18 this week and, as it steps out of adolescence and into adulthood, can be classed as one of the true success stories of the internet age.
Having begun as a University research project in the late 1990s, Google is now a global company, valued at $82.5 billion and ranked at number two on the world’s most valuable brands.
But how did we get to this point? How did one company see off competitors and become an internet-age empire?
The very beginnings
Initially conceived by two computer science PhD students back in 1996, Larry Page and Sergey Brin looked to create a new formula from other search engines.
While others ranked their results by the amount of times the search terms were mentioned, Page and Brin invented the ‘PageRank’ system – which looked to rank websites “by counting the number and quality of links to a page to determine a rough estimate of how important the website is.” According to Google’s own definition, “The underlying assumption is that more important websites are likely to receive more links from other websites.”
From there, Google was born – initially as a Stanford University website feature, before the domain was registered in 1997 and it became an incorporated company in 1998.
At this point, the site was operating out of the garage in California, but it would soon begin to grow.
Seeing off the competition
Despite very nearly selling the company in 1999 due to the strain on their academic pursuits, Page and Brin succeeded in securing a massive funding of $25 million dollars by the end of that year.
Over the next few years, Google gradually peeled away from the competition and coined the unofficial corporate slogan: “Don’t be evil.”
Charles Arthur, the freelance technology journalist and author of Digital Wars: Apple, Google, Microsoft and the Battle for the Internet puts their toppling of the competition down to their revenue strategy:
“Other search engines were either publicly listed or part of venture-funded companies, and got their revenue from display ads. The dot-com bust of 2000-2001 killed a lot of them off because their ad revenue collapsed.
Google began experimenting with text ads based on search terms – an idea that Bill Gross first came up with at another search engine and sold to Yahoo. Google paid Yahoo in stock to settle a patent dispute over the use of the technique. Gross never worked for Google but had discussed his ideas with Page and Brin.
Google attracted users because it was miles better than anything else out there. So it also sucked away the other source of revenue for rivals – eyeballs.”
By 2004, Google was a public company operating at a value of $23 billion dollars.
While seeing off the search engine competiton, Google began to expand its interests elsewhere – launching the Gmail in 2004 and Maps in 2005.
It was clear that Google saw its future elsewhere, but the idea that search had become secondary is greatly exaggerated according to Arthur:
“The business model hasn’t changed. Google overwhelmingly makes its money from search ads for the most part. People think, because they hear about wild projects and businesses like Nest, that it is diversified. It isn’t. Nest is tiny compared to the rest of the Google business. Fiber is tiny. Nexus phones are minimal revenue sources.
It’s all search still.”
Many companies have been purchased by Google, with none more successful than Californian outfit Android – sold for around £50 million in 2005. The transaction was described by Google executive David Lawee as “the best deal ever”.
However, not all companies have benefited from being under Google’s wing as much as Android, as Charles Arthur explains:
“Other purchases have done badly and others well. There’s no generalisation. Wikipedia has a long list of Google purchases (that are known of – there are almost surely more). I’d guess it’s about 50-50 succeed-fail, but the successes have been very big at key moments. Not so many recently.”
Successes and failures included, Google had moved to their purpose-built Googleplex offices in San Francisco by 2004 and had firmly established themselves as one of the world’s leading companies.
The modern era
A landmark moment was reached for the company in 2011, when Google surpassed one billion unique visitors in the month of May. It was the first time a website had ever achieved those kinds of numbers.
However, some critics have questioned whether the company’s original ‘Don’t be evil’ motto has been lost in the grab for power – citing the tracking users across all platforms and logging of huge amounts of public data, as well as Google’s aims to avoid corporation tax in a number of countries.
As of 2015, Google had become an integral part of newly launched parent company Alphabet Inc (with Page and Brewin still at the helm) and is now valued as the world’s second most valuable company, behind fellow US competitor Apple.
Could anyone have predicted this rise? Unlikely, explains Arthur:
“Not even Page and Brin did. They tried to sell the nascent company to Jerry Yang at Yahoo. They demonstrated how much better their search was than Yahoo’s. Yang said that Yahoo’s revenue came from people clicking through to the next search results page so they could show more adverts – so wasn’t interested.
“Anyone could have forecast it. And they’d have been guessing.”
As for what will come next, the newly-named Alphabet (with the new company motto ‘Do the right thing’) still has challenges ahead according to Arthur:
“As long as Internet use keeps growing, it can keep showing search ads. But so far it hasn’t shown itself to be any good at diversifying away from that high-profit revenue stream. As with any maturing company, the question is how it keeps its corporate culture young and ready to exploit the next big idea.”
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